The fiscal 2026 National Defense Authorization Act authorizes $900.6 billion for U.S. defense spending, a slight increase over 2025 spending levels.
However, disputes such as the Russia-Ukraine war, Middle East conflicts and U.S.-China tensions over Taiwan will likely trigger even higher global defense spending in the coming years.
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Fortunately, these geopolitical pressures provide significant tailwinds for defense sector earnings. Investors looking for stability often find defense stocks attractive because of their reliable, multi-year government contracts. In this tense geopolitical climate, Morgan Stanley analysts have identified these seven top-tier defense stocks to buy in 2026:
| Stock | Implied upside* |
| GE Aerospace (ticker: GE) | 38% |
| RTX Corp. (RTX) | 17% |
| Howmet Aerospace Inc. (HWM) | 11% |
| Northrop Grumman Corp. (NOC) | 14% |
| General Dynamics Corp. (GD) | 22% |
| TransDigm Group Inc. (TDG) | 38% |
| L3Harris Technologies Inc. (LHX) | 10% |
*From April 10 close, according to Morgan Stanley price targets.
GE Aerospace (GE)
GE Aerospace supplies jet engines and services around the world and currently has an installed base of roughly 30,000 military and 50,000 commercial aircraft engines. The company’s defense and propulsion technologies business designs, produces and services jet engines and associated electrical systems and components for governments, commercial airframes and militaries. Analyst Kristine Liwag says GE Aerospace is a best-in-class company that supplies mission-critical products and has an attractive long-term financial outlook, including a wide competitive moat, significant pricing leverage and durable revenue growth. Morgan Stanley has an “overweight” rating and $425 price target for GE stock, which closed at $308.35 on April 10.
RTX Corp. (RTX)
RTX is the defense behemoth created by the 2020 merger of Raytheon and United Technologies. The company’s Collins and Pratt & Whitney subsidiaries are more focused on the commercial aerospace industry, but its Raytheon subsidiary develops advanced sensors and provides training, software and cybersecurity solutions for the U.S. intelligence community and the Department of War. Liwag says RTX is her top stock pick in the aerospace industry, and she is bullish on its attractive valuation compared to GE. She anticipates RTX will continue to expand its margins. Morgan Stanley has an “overweight” rating and $235 price target for RTX stock, which closed at $201.56 on April 10.
Howmet Aerospace Inc. (HWM)
Howmet Aerospace manufactures lightweight metal products, specializing in jet engine components, titanium structural parts, aerospace fastening systems and forged wheels. The company also provides defense solutions to its military partners, such as precision machining, integrated program management and metals expertise. Liwag says Howmet’s pricing power and wide competitive moats position the company to expand its margins and deliver growth numbers above the industry average. She says elevated industrial gas turbines demand coupled with automation and limited competition will increase profitability in Howmet’s engine products business. Morgan Stanley has an “overweight” rating and $280 price target for HWM stock, which closed at $252.67 on April 10.
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Northrop Grumman Corp. (NOC)
Northrop Grumman is one of the world’s largest weapons and military technology producers. The company’s defense systems segment provides battle management and missile systems products and services, while its mission systems segment focuses on airborne sensors and networks, as well as other military and intelligence mission solutions. Liwag says the U.S. Air Force’s interest in accelerated production of B-21 Raiders highlights the elevated demand for Northrop’s key products. She says the company already has a record projects backlog and could see additional contract awards in 2026. Morgan Stanley has an “overweight” rating and $765 price target for NOC stock, which closed at $673.73 on April 10.
General Dynamics Corp. (GD)
General Dynamics is a diversified aerospace and defense company that produces a wide range of products, including Gulfstream jets, Abrams tanks and nuclear submarines. The majority of the company’s revenue comes from the U.S. government, particularly its large contracts with the Department of War. Liwag says General Dynamics will benefit from accelerating global defense spending and resilient demand for business jets. She has a particularly optimistic outlook for the company’s marine business given the Donald Trump administration’s emphasis on the domestic U.S. shipbuilding industry. Morgan Stanley has an “overweight” rating and $410 price target for GD stock, which closed at $335.15 on April 10.
TransDigm Group Inc. (TDG)
TransDigm designs and manufactures original aircraft parts sold to manufacturers. The company also produces aftermarket replacement parts sold to commercial and military aircraft operators. In recent years, TransDigm has announced several significant buyouts, including acquiring SEI Industries, Raptor Scientific and the components and subsystems business of Communications & Power Industries. Liwag says TransDigm’s stock’s underperformance so far in 2026 is a buying opportunity given the company’s attractive valuation, balance sheet strength, capital deployment opportunities and recent acquisitions. She says TransDigm is the cheapest commercial airline aftermarket investment. Morgan Stanley has an “overweight” rating and $1,660 price target for TDG stock, which closed at $1,207.18 on April 10.
L3Harris Technologies Inc. (LHX)
L3Harris Technologies is an aerospace and defense company focused on technology-driven mission solutions. The company’s leading defense products include airborne ISR (intelligence, surveillance and reconnaissance) and electronic warfare systems, precision-guided munitions and propulsion products, communication systems, integrated vision solutions and space and missile defense technologies. Liwag says her sum-of-the-parts valuation of L3Harris suggests the stock has an attractive risk-reward skew at current levels. She says the planned initial public offering of the company’s missile business could be a bullish catalyst in the second half of 2026. Morgan Stanley has an “overweight” rating and $390 price target for LHX stock, which closed at $353.59 on April 10.
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7 Best Defense Stocks to Buy Now originally appeared on usnews.com
Update 04/13/26: This story was published at an earlier date and has been updated with new information.
